BILL NUMBER: S1237A
SPONSOR: SANDERS
 
TITLE OF BILL:
An act to amend the state finance law, in relation to the repeal of the
rebate for stock transfer tax paid and the funds of the stock transfer
tax fund and the dedicated infrastructure investment fund; to amend the
environmental conservation law, in relation to establishing the safe
water infrastructure action program for the purpose of making payments
toward the replacement and rehabilitation of existing local municipal-
ly-owned and funded drinking water, storm water and sanitary sewer
systems; to amend the tax law, in relation to taxes imposed in certain
transactions; to repeal section 280-a of the tax law relating to the
rebate for stock transfer tax paid; to repeal section 92-i of the state
finance law relating to the stock transfer incentive fund; and to repeal
certain provisions of the administrative code of the city of New York
relating thereto
 
PURPOSE:
To reinstate the Stock Transfer Tax of 1905.
 
SUMMARY OF PROVISIONS:
Section 1: Repeals Section 280-a of the tax law
Section 2: Repeals Section 92-i of the state finance law
Section 3: Directs how the stock transfer tax revenue is allocated
Section 4: Amends Section 93-b of the state finance law
Section 5: Establishes that in no fiscal year shall the total amount
paid from the fund exceed the total collections during such fiscal year
Section 6: Establishes that all payments from the stock transfer tax
fund shall be made on the audit and warrant of the comptroller
Section 7: Establishes that the comptroller must notify the commissioner
of taxation-and finance that all remaining funds held in the stock
transfer tax fund must be released to the stock transfer incentive fund
Section 8: Creates the Safe Water and Infrastructure Action Program
Section 9: Amends subdivision 3 of section 270 of the tax law
Section 10: This act shall take effect immediately
 
JUSTIFICATION:
The stock transfer tax was first adopted in 1905 by the Republican Party
because the State needed revenue and the Republicans preferred sales
taxes (which STT is) to income and real property taxes. The New York
Times panned it, claiming the Stock Exchange would move to New Jersey.
In fact, the NYSE created a corporation symbolically for that purpose
but took no steps toward moving out of New York. The New York Times was
wrong. Volume on the exchange increased, the New York exchanges pros-
pered, and all the other exchanges that did not have the tax died out.
The proceeds of the tax were diverted in the 1970s to New York City to
address the financial crisis the City was facing at that time. It was
eliminated in 1981, ostensibly because NYC had recovered, forgetting
about other needs of the City and State as a whole. This was also the
Reagan era, marked by artificial exuberance about the stock market in
general (which was later adopted by Bill Clinton, contributing to the
financial crisis of 2008).
The Stock Transfer Tax is a sales tax of 0.1% or 0.001 on the sale of
stock up to a maximum per transaction of $350. For example, the tax on
the purchase of a stock that costs $100 Would be ten cents. The STT
operates the same as any sales tax. When you go to the store and pay
sales tax, the customer (in this case, the investor) pays, not the store
owner (in this case, the stock exchange). The store owner simply
collects the tax and remits it to the government. If the tax is too
high, no one will buy the product, and the store owner is harmed. If the
tax is set low enough to be inconsequential, the seller is not harmed at
all.
Most people who buy stock in New York are non-New Yorkers, either from
other states or foreign countries. Approximately 40% of all stock sold
worldwide is sold in New York. Finance is our greatest resource in New
York. For example, if Texans wish to trade in New York, they pay no tax
to the state of New York. However, New Yorkers pay tax on Texas oil,
which is one reason their tax burden is lower than ours.
Should the Stock Transfer Tax be enacted, Yale Economist Jim Henry esti-
mates it will raise as much as $60 billion based on the average share
price and volume of the New York Stock Exchange(1).
When the STT first passed, the tax was collected by buying stamps, which
were then affixed to the stock certificates as proof that the tax had
been paid. Without the stamps, the transaction was not enforceable under
New York law. The tax would be remitted electronically today. The
objection has been raised that the NYSE would move transactions to "the
cloud" to escape the tax, but transactions are already done on "the
cloud." "The cloud" is not mysterious; it is simply a series of linked
computers. As long as some portion of the computer activity (or even a
phone call) is invovolved in the transaction that takes place in New
York, it is taxable here (see the 2018 Supreme Court decision in South
Dakota v. Wayfair) (2)
The funding breakdown is as follows:
*10% - Metropolitan Transportation Authority (MTA)
*5% - Division of Housing and Community Renewal
*5% - New York City Housing Authority (for the sole purpose of section
nine housing)
*5% - Highway and Bridge Trust Fund (capital account)
*5% - AMTRAK
*5% - CHIPS (Consolidated Local Street and Highway Improvement Program)
*5% - SWAP (Safe Water and Infrastructure Action Program)
*5% - AIM (Aid and Incentives to Municipalities)
*5% - Downstate non-MTA Transit
*5% - Upstate Transit
*10% - Clean Energy Fund (via NYSERDA)
*2.5% - City University of New York (CUNY)
*2.5% - State University of New York (SUNY)
*10% - Department of Education *10% - Department of Health
*10% - Department of Agriculture / DEC / Parks & Recreation (reforesta-
tion)
 
LEGISLATIVE HISTORY:
2023/2024: a4574a/s1297a- referred to ways and means/referred to finance
2021/2022: a3353a/s1406a- referred to ways and means/referred to finance
 
FISCAL IMPLICATIONS:
Up to $60 billion in revenue to New York State
 
EFFECTIVE DATE:
This act will take effect immediately
(1) https://drive.google.com/file/d/lv xNXrdJtoKnsMiGzzQPfH9tkMzy/
view?usp-sharing
2 https://www.supremecourtgov/opinions/17pdf/17-494 j4el.pdf

Statutes affected:
S1237: 280-a tax law, 92-i state finance law, 93-b state finance law, 93-b(1) state finance law, 270 tax law, 270(3) tax law
S1237A: 280-a tax law, 92-i state finance law, 93-b state finance law, 93-b(1) state finance law, 270 tax law, 270(3) tax law